Here's What's REALLY Happening To Government Bond Markets Around The World

The fact of the matter is that yields are plunging left and right. The yield on the US 10-year bond has just fallen below 1.7%. In Germany, the 10-year has fallen to a new record of 1.33%. UK borrowing costs have hit a record low of 1.73%. In Finland, the yield on the 10-year is 1.624%. You guessed it, that's a record low. Sweden: The 10-year yields 1.405%. Same deal. In Australia, the 10-year has dropped close to a record low of 3.061%. Canadian 10-year yields at 1.87% are close to a record low. Japan's 10-year: 0.85%.

Get the point?

All around the world, people are clamoring for the safety of government debt.

The one thing that all of these countries (almost) have in common is their own printing press for currency. The one exception is Finland (a model of fiscal health). Since German controls the ECB, we're going to argue that they're included in countries that have their own currency.

Unfortunately, most people look at Spain and Italy and Greece, and make big sweeping comments about how governments are at their end of their rope. It's just not the case. In the desperate search for a safe return on capital, people have never been more desperate to give governments their money.

And furthermore, this unfortunate extrapolation from a few weak apples is leading to some poor policy mistakes, where governments that should be spending are doing the exact opposite.